![]() ![]() “There is definitely a pattern moving away from quarterly guidance, to focus on long-term investments rather than quarter-to-quarter forecasting,” McDermott says. ![]() In the past couple of years, JPMorgan Chase CEO Jamie Dimon and Berkshire Hathaway’s Warren Buffett have advocated eliminating quarterly earnings guidance, and former PepsiCo chair Indra Nooyi successfully lobbied the White House to get the US Securities and Exchange Commission to undertake a study on moving to a six-month reporting schedule. “It is impossible to try to model out how this is going to go for a year, or even the next couple of days or weeks,” says Peter McDermott, a senior client partner in Korn Ferry’s Corporate Affairs and Investor Relations practice.īut many executives have complained for years that a focus on short-term performance hurts value for everyone over the long haul. Other firms are tapping lines of credit, worried that a huge drop-off in sales could leave them short of cash to pay bills or repay other debt. ![]() Firms, which until only a couple of weeks ago saw a slow-but-steadily growing economy, are now contending with a potentially very deep recession. The reason for the short-term withdrawal, of course, is COVID-19, not only for the impact the virus has already had, shutting down broad swaths of the world, but also for the uncertainty of how long those shutdowns will last. Such steps also bring up a bigger debate: will firms change how much guidance they give investors altogether? “It’s the safe move, and maybe the only common element investor relations experts can take, whether it’s a positive impact or a negative impact,” says Richard Marshall, global managing director of Korn Ferry’s Corporate Affairs practice. Experts predict that the practice of “withdrawing guidance,” will only increase over the coming weeks as companies begin the traditional first-quarter earnings report period. Several airlines, hotels, and other travel-related companies made such announcements last week, and on Monday a major electronics retailer and a semiconductor company joined in. Company executives have said they can’t guide investors on revenues or profits, not only for the coming quarter but for the foreseeable future. Indeed, firms did just that in January and February, during their last earnings calls.īut now, companies are telling investors to disregard all that. It’s been a part of every business quarter: company executives report how much money their firm made over the last three months and then tell investors what the firm expects to do over the next three months and fiscal year. ![]()
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